Online banking is no longer a niche channel and, by understanding who is and who is not using online access, banks can work to increase adoption, better serve their clients and reduce the costs of routine customer service.
In December 2008 and January 2009, Gartner surveyed 3 988 consumers ages 18 or older in the US and the UK on attitudes and behaviours related to retail payments, banking and investment services. A total of 47% of US adults and 30% of adults in the UK reported using online banking in the previous month.
"Over the past several years, online banking has been seen as a way of appealing to more affluent and younger clients," says David Schehr, research director at Gartner. "However, what is becoming clear is that the overall level of consumer internet use and the increasingly narrow segment of non-users – particularly in the US – are shifting the dynamics of who is using online banking and what they seek from it."
The survey showed that just over half of all higher-income consumers in both the US and the UK utilise online banking. In comparison, 35% of Americans in lower-income households use online banking, but only 17% of those in lower-income UK households use online banking.
This is more about online access than about interest in online banking. With consumers who have lower incomes but do use the internet, the gap in online banking usage – compared with those with higher incomes – shrinks markedly in the UK and virtually disappears in the US.
Comparing online banking usage between all lower- and higher-income consumers shows usage is one-and-a-half times higher in the upper-income group in the US than in the lower-income group, and three times as high in the UK. However, when only internet users are compared, the ratio between higher-income and lower-income adults in the UK drops to less than two-to-one, and is virtually even in the US.
The most-frequently cited reasons for not using online banking were channel-related, that is, simply preferring to use other channels, with 61% of US nonusers and 58% of UK nonusers selecting this as an important reason for not utilising online banking. Forty-one percent in the US and 38% in the UK said security was a most important reason for not banking online. The importance of access or technology as issues were substantially lower.
Furthermore, in each country, only 20% of the nonusers cited more than two reasons as important. It is also worth noting that simple inertia plays a role in nonuse, as a substantial number of non-users (25% in the US and 31% in the UK) cited no single factor as important, yet the did not use online banking.
"Focusing on how the two main factors for non-use – channel and security – link to the key demographics of income and generations provides clues for banks working to increase online acceptance," says Schehr. "Compared with younger consumers, pre-boomers, who are 63 or older, are more explicit in their reasons for not using online banking < they are comfortable with other channels, such as the branch, and they are worried about the security of online banking. In a way, this creates a great opportunity to convert these nonusers to users, since the causes of their concerns can be more directly confronted and addressed."